1. APPROPRIATE AREAS
FOR INVESTMENTS AND TRADE
IN UKRAINE
prepared by: HASAN DING
Ministry ofForeign Affairs TICA
Ankara Turkey
Physical potential presents a rather positive picture of the Country. However, one can not
merelydepend on such an approach for the feasibility's of the projects at sectoral level. For
this reason issues such as;
-economicandsocialstabilityoftheCountry;strengthofeconomicmanagementand
political developments,
-realization levels ofadministrative andeconomicreforms,
-orderandsecuritywithintheCountryandalongthemaintransportationand
connectionnetworks,
-credibilityoftheeconomicperformance oftheCountry,
-relationswiththeothercountriesandlong-termstabilityexpectations inthese
relations,
are takenintoconsiderationbeforeappropriateinvestmentandtradeareas areidentifiedand
attention has beendirectedtowards such areas_
It is riskyanddeceivingtoapproach thetopicbyusingspecificprojects.However,one can
makethe followingconclusionsafter theanalysis ofthe economic sectors;
A- In agriculturalsector,there isahigh investmentpotentialin all activities which maydirectly
or indirectlyhave impacts in increasedproductivity's andyields.
a) Modernizationoffertilizerproductionfacilities,improvementofcapacitiesand
manageablemarketingnetworks,
b) Increasedproductionofagriculturalequipmentandmachineryaswellasthe
modernizationof thetechnologies usedin agricultural sector,
c) Constructionofnecessaryfacilities fortheelimination ofbottlenecks regardingthe
fodderinputsofthelivestock andanimalhusbandrysub-sector,
Establishmentofan efficientdistributionnetwork,

2. d) Agriculturallands andclimates ofSouthern UkraineandAutonomous Republicof
Crimeaprovideveryappropriate environmentsfortheproduction offruits,vegetables
and flowers,mostlyduetothecapacityand theproductivityoftheagriculturallands.
Greenhouseactivities which wereimportantin the pastarecompletelyoutofoperation
for thetime beingduetothelackof operational capital.However,thereis acontinuous
and considerableimportactivityoftheseproducts.Forinstance, 85%ofaircargo
transportation originatedfromThe Nederlands towards Ukrainecontains .cutflowers.
This statistical dataalonecanshow the importanceandprofitabilityofgreenhousesub-
sectorandactivities_For thisreason,there area lotofadvantages inre-activating
agricultural facilitiesandgreenhouseswhichare locatedespeciallyatCrimeaas again for
the national and local economies.
e) Storagecapacitiesshould be increasedinorder tominimizetoloses afterharvesting.A
network ofcoldstoragefacilities especiallyfor climate-sensitive agriculturalproducts and
food-industries shouldbe established.Additionally,as alogicalandsupportive
continuation after harvestinganumberofinvestments should be made in"packing
industries" which are based onseveraldifferenttypesofrawmaterials.
f) Investmentsshouldbe made inagricultural industries inorder toincrease value added
in agriculturalproducts and sector.
B- Partnerships can be encouragedandestablished in operational managementactivities
of themines with long-term reserves and which are producedmorethanthe domestic
demand.As far asthe minerals areconcerned,itisnecessarytoidentifythemines for
crude iron.coal and valuablegranite.
C- Investments canbe made byformingvarioustypes ofpartnerships inferro-
metalurgical industries, chemicalindustries andespeciallyfertilizers,
D- Capacityutilizationratiooftheexistingindustries are verylow.Within the framework
of privatization,thesefacilitiescaneitherbe sold orvarious forms ofpartnerships canbe
utilizedinorder toimprove theirconditions.
E- Automotive sectorcanbe seen as astrategicareafor foreigninvestments.Existing
production is far awayfrommeetingthe local demand which isexpanding rapidly.There
are alreadyseveral foreigncompanieslikeGMfrom the USAand DaewoofromSouth
Koreawhichare interestedin investingin this sectortogether withtheirdomestic
partners. It is beingpredictedthattherewillbe ahigh demand forsmallcars in this
countrysimilartotheexperiencesofPoland and Hungary.An agreementhad beensigned
betweenUkraineandHungaryduringNovember1996regardingtheproductionof
Ikarusbusesandtheirspare parts. Alsoduringthistime,negotiations tookplace between
the MinistryofTransportation ofUkraineandEvobus, asub-companyofMercedes-
Benz,regardingbus production .This production is planned to

3. take placeat thebus factorylocatedat Lviv.Thereis anagreement betweenRenault
Company andthefacilities at Lvivregardingbus production.Additionalto
all these, there is a project regardingthe productionof Renault andmotors at thefacilities
of Malyshev(Harkov) tobe usedfor Lvivproducedbuses.
F- Constructionsectoris notactive enoughforthe time being,mostlydue tothe financial
bottlenecks. However, inthe short -termexpandedactivityshouldbe expectedoncethe
economy is re-vitalized. This expectedconstructionactivitywill be for repairingthe
existingbuildings as well as newconstructions.For thisreason,productionandtrade of any
kindof constructionequipment will be veryfeasible activities.
G- There are alsoseveral tourism projects whichrequireattention. Forinstance, investment
andoperationof urban hotels areappropriate andprofitableeconomic activities.Inthis
subject, thehighest potential is at Kiev. Andit is verynatural tosee this potential inKiev
due to its increasedeconomic activityandimportance.Forthis reason,additional tourban
hotels, restaurants,healthcenters,entertainment centers andalikearealsoneeded.A large
portionoftheforeign investments inUkraineareallocatedat Kievregionandthis alone
will increase the demandfor such tourismfacilities. The cityofKievis also very rich in
providinghistorical tourist attractions.Ingeneral thecountry has numerous well
preservedcastles,palaces, churches andresidences whichare of historical importance.
Additional tothese attractions, the southerncoasts oftheCrimearegionalso do have
tourism potentialandinfrastructure. This topic shouldbe studiedfurther.
H- Some sub-activities oftheservice sector are inurgentneedforentrepreneurs. Amongthese,
inter-citybus operations andmanagement,cargo transportation activities, civil air
transportation, management of business andshoppingcenters are important examples.
There is a rapidincrease inthenumberof vehiclesin traffic.However, theservices provided in
this sector are not showing the same trend. To start with there is an urgent need for the
improvement of modern fuel distribution and marketing networks. This is an economically
feasible activity. Similarly, car washing and service stations as well as the management of
multi-layered public parking garages are also among the profitable activities.
J-Bigsupermarkets andfast-foodfacilities areappropriate areas forinvestments inbigcities
which areurgentlyneeded.
K- Real demanddetermines the sizeofcommercial activities.Andit is directlyrelated
to thesize ofthepopulation andthe level ofincome.For Ukrainethevalues of these
indicators are as follows;
. Populationofthecountryis approximately52millionpeople.
. Per capita income (PPP) was US $ 3000 in 1994

4. US $ 5590in1990
. During 1989 foreign trade performance of the country is very high. ( exports: US $ 77.1
billion, and imports: US $ 86.1 billion had been realized.) It is expected that the national
economy would show this performance again in the near future.
. Geographicallocationofthecountryis anadvantage for partnerships withother
countries_
Whenthese indicators aretakenintoconsideration,it becomesveryclear that Ukraineis an
important partner countryin medium andlongterms. I would like to conclude my
observations andpoint of views with this last paragraph;
L- Additional to all these, I would like to present you the following figure on "Ukraine Market
Data" prepared by a research company called USA-Ukraine regarding the Ukrainian
market.This is a summaryofthefindings ofthis Company whose Headquarters are located
at Chiago. The study identifies the main markets of Ukraine by using scientific methods as
presented in the following figure which concludes my short report.
This chapter is takenfrom the bookwrittenby liasanDint, titled:"POTENTIALSFOR
INVESTMENTSAND TRADE IN . UKRAINE" November, 1997